In May, we announced the winners of this year's Country Awards. Today, we are pleased to announce the rationale for our decisions covering Taiwan, Thailand and Vietnam.
Details of the winners for: Bangladesh, China, CLM (Cambodia, Laos and Myanmar) and Hong Kong, including Hong Kong's Chinese financial institutions, can be viewed here; India, Indonesia, Malaysia and Mongolia can be viewed here; and Pakistan, the Philippines, Singapore, South Korea and Sri Lanka can be viewed here.
Congratulations to all the winners.
TAIWAN
DOMESTIC
BEST BANK: CTBC Bank
CTBC remains Taiwan’s most profitable bank and it is a name that seems certain to gain increasing brand recognition outside of the country in the coming years. This partly reflects a fundamental shift in the way that global supply chains are being reconfigured as Taiwanese companies leave China for pastures new as part of the government’s Go South policy.
The bank is following its clients and in doing so, creating a very robust international platform to gain and service new ones. During 2020, for example, it increased its stake in Thailand’s LH Financial to 46.6% becoming the single largest shareholder.
LH Financial is the country’s 13th largest bank by assets, but CTBC has ambitions to propel it into the top 10 within the next few years. The purchase makes a lot of sense given how many Taiwanese electronics companies are setting up plants in Thailand.
The same is true in Vietnam where CTBC has a branch and wants to double its operations. It has similar ambitions in Indonesia and the Philippines, not to mention the US where many Taiwanese mid-cap companies hope to buy start-ups on America’s West Coast.
Back home, the big story continues to be digitalisation. Taiwan managed to fend off Covid-19 very successfully during 2020. This resilience meant that CTBC still enjoys extremely low NPL ratios: 0.47% at the end of 2020 according to S&P Global Financial Market data.
But there was nevertheless an accelerated shift towards digital banking. The bank has 9.7 million customers and five million of these use internet banking (up 11% year-on-year). Some 3.8 million also use its mobile app (up 20%), the highest number among any bank in Taiwan.
CTBC is a digital pioneer and nothing underlines this better than its partnership with a global technology giant like Apple. This spring, CTBC changed the way that customers interact with their branches.
In the past, they would have needed to take a ticket and join a queue. Now their mobile phone will “wake up” as they pass through the doors and ask them what services they want. It will then try to complete it or provide QR codes to speed up execution.
BEST SUSTAINABLE BANK: E.SUN Bank
E.Sun is an apt name for a bank that lights the way for ESG in Taiwan. It is head and shoulders above the competition and in December received a double ESG rating from MSCI for the fourth year running.
Winning FinanceAsia’s award once again reflects some impressive strides since we heard the bank’s pitch last year.
Most notable is the fact that ESG lending has risen from 5.4% of its loan book to roughly 8% at the end of 2020. This equates to NT$67 billion ($2.4 billion).
During 2020, it also became the first Taiwanese bank to report climate change risks and exposures in its loan book. It said that NT$228.26 billion is classified as medium or low risk, up 9.1% year-on-year.
Many banks have set targets to stop financing coal over the coming decade. E.Sun went zero in 2019.
The big story in Taiwan is renewables and in 2020, E.Sun financed offshore wind farms with total capacity of 3,747MW and solar power plants capable of producing 615MW.
E.Sun is determined to encourage more Taiwanese companies to embark on an ESG journey too, particular those in the all-important electronics supply chain. This February, it launched an important initiative after signing up 32 Taiwanese companies to its E.Sun ESG and Sustainability Initiative.
Their number include AU Optronics and China Steel Corp, which have both pledged to incorporate ESG into their business and implement the UN’s Sustainable Development Goals (SDGs).
E.Sun also re-configured its own operations early in 2021 setting up a Sustainable Development Committee from its existing CSR Committee. This features two new working units – climate changes and human rights, on top of the four original ones: corporate governance, environment, customers and employees.
BEST INVESTMENT BANK, BEST ECM HOUSE, BEST DCM HOUSE: KGI Securities
KGI Securities is the perennial winner of our DCM award, but this is the first time that it has swept the board across investment banking and ECM as well. Its success is well deserved although KGI is all too well that it cannot afford to rest on its laurels given the stiff competition it faces from both domestic and international players.
When it comes to DCM, there really is no one else that is active across NT$-denominated bonds, Formosa bonds and G3 currency bonds by Taiwanese issuers in the way that KGI Securities is.
The securities firm ranked first among domestic houses in the Formosa market, which had a particularly active 2020. It is a market that typically attracts international issuers.
So TSMC made quite a splash when it launched a debut bond last September via KGI and Goldman Sachs. The electronics giant raised $1 billion from a 40-year deal with a five-year call option to help fund its record-breaking capex plan.
But perhaps KGI’s most interesting deal was another debut deal, this time a subordinated debt issue for China Life. The NT$10 billion ($360 million) 2.7% perpetual enabled the insurance group to improve its regulatory capital position and add some leverage to its balance sheet without diluting shareholders’ control.
The main challenge lay in the fact that Basel III regulations do not allow Taiwan’s enormous and yield hungry insurance industry to buy each other’s perps. So KGI had to work hard to find alternative sources of demand.
It was successful, setting an important benchmark for others to follow. In the end, roughly one third of the deal went to pension funds, about a fifth to corporates looking to make a return on idle cash, another fifth to small regional financial institutions and the rest to HNW investors.
KGI’s HNW client roster also came into its own supporting a $300 million 3.75% 2023 Reg S deal for Chailease. The demand, accounting for about two thirds of the deal size, enabled the leasing group to shave about 100bp off the pricing and make it competitive with bank funding.
When it comes to M&A there has been plenty of active in the electronics sector as supply chains are re-configured and Taiwanese groups try to retain their advantage over up-and-coming Chinese competitors.
The largest transaction that KGI worked on during the awards period was Pegatron’s $510 million acquisition of Casetek.
Pegatron is one of Apple’s leading assembly partners. Taking over its metal chassis-making affiliate enabled it to boost its competitive position against Chinese rival Luxshare.
However, before it could do that, it had to overcome investor concerns about why it wanted full ownership and whether the valuation was fair.
KGI also advised on another key M&A transaction in the electronics sector. This was Zhen Ding’s $175.9 million acquisition of BoardTek. This takeover provided a diversification opportunity for Taiwan’s printed circuit board (PCB) leader into high-frequency rigid PCBs.
Then there was the $273.4 million re-organisation of Yageo Group, aimed at making the group more efficient.
Finally KGI was also an advisor on the $378 million formation of a new company ENNOSTAR by means of a share swap. The resulting holding company brings together upstream and downstream LED players Lextar and EPISTAR. Joining forces enables the two to jointly bear the high costs of future technological development.
When it comes to ECM, IPOs are few and far between in Taiwan. Those that come tend to be tiny such as the NT$331 million flotation of Rich Honour International Designs that KGI Securities led last summer. Its largest secondary deal comprised an NT$930 million offering for Evergreen Steel Corp.
BEST BROKER: Yuanta Securities
This was one of the easiest picks for FinanceAsia again this year. Yuanta Securities consolidated its domestic dominance and continues to expand abroad as it builds up a regional platform across Asean countries such as Indonesia, the Philippines, Thailand and Vietnam.
Yuanta has built up a strong warrants trading business in Thailand, for example, and has once again won FinanceAsia’s award for Best Investment Bank in Cambodia.
The brokerage’s cutting-edge digitalisation is one of the key reasons why it is surging ahead so strongly. Its My Yuanta App, in particular, has gone from strength to strength since it was launched in September 2018.
By the end of FinanceAsia’s awards period, it had processed cumulative transaction volumes totalling NT$7.6 trillion ($275.3 billion). That’s a pretty impressive achievement in just two-and-a-half years.
Yuanta’s USP is artificial intelligence (AI). The latest version incorporates a number of new functions such as AI wealth management, cloud computing stock screening strategies, custom homepage shortcuts and multi-column quotation mode. Clients can also set a price range for stocks, triggering an automatic buy or sell order when they enter it.
As a result, Yuanta’s overall brokerage market share in Taiwan has now climbed from 11.88% at the end of 2018 to 12.24% at the end of 2019 and 12.9% at the end of 2020. Similarly, its stock lending market share has risen 1.5 percentage points year-on-year to 23.64% and its warrants market share from 23.13% to 27.65%.
Yuanta has over a million active retail clients in Taiwan and was signing up large numbers throughout 2020. It recorded an average of 20,000 new accounts per month during 2020, and during the first quarter of 2021 that average increased to 30,000. It appears to be well on its way to the winning the award again next year.
BEST PRIVATE BANK: CTBC
It was another strong year for CTBC, which recorded one of the highest jumps in AUM that FinanceAsia noted across the whole region. The number of customers grew 30% and HNW assets were up 10%, helping to achieve overall AUM growth of 15% to NT$610 billion ($22.05 billion).
There were a number of long-term trends propelling this. First, the government has been giving companies preferential tax rates to repatriate funds back to Taiwan. Secondly, geopolitics and Covid-19 have led many private banking clients to re-think where they put their money and who looks after it.
CTBC also benefitted from new wealth management regulations in Taiwan. The government has licensed CTBC as the only private sector bank to provide structured products to its clients.
This is clearly a very appealing carrot to acquire new clients looking to boost their returns at a time when interest rates are remaining lower for longer. The bank reports that between January and April, it received an NT$66.531 billion AUM windfall from 644 clients (individuals and clients) signing up to the service.
Examples of the new products it can sell are: tailor-made foreign currency denominated structured notes; high yield bonds (below the current BB threshold); unrated bonds; variable rate bonds; and equity-linked structures tied to stock market performance.
The bank also continue building out its services for the country’s large number of first generation entrepreneurs putting succession planning in place. Last July, it officially launched Family Wealth Governance Services.
This embraces family governance, succession planning, financial planning, tax-efficient planning and legal services. CTBC is ideally placed to capture this kind of business given that it has an average client relationship spanning two decades.
It knows its clients very well and can therefore act as a bridge and expert advisor from one generation to the next.
INTERNATIONAL
BEST BANK, BEST INVESTMENT BANK: Citi
When it comes to the Best International Investment Bank, it is nearly always a battle royale between Citi and Goldman Sachs. Both have incredibly deep and long-standing relationships in Taiwan.
During 2020, they were often on either side of the same landmark M&A deals.
First there was Taishin’s NT$5.5 billion ($187 million) acquisition of Prudential. Citi was the buy-side advisor, helping Taishin gain entry into the insurance business and completing its universal banking strategy.
Then there was Yageo’s acquisition of Turkey’s KEMET Corp, which ranked as one of FinanceAsia’s three North-east Asian deals of the year during our 2020 Achievement Awards. The $1.8 billion deal represented one of the largest-ever outbound acquisitions in Taiwan’s history, creating a global leader in the passive components industry.
What helped to swing the award in Citi’s favour was the fact that it was on the Taiwanese side of the takeover. It also led the $1.1 billion acquisition financing, underlining its strong calling card as a bank that provides an end-to-end service.
Indeed, Yageo was arguably Citi’s best client during the awards period. The US bank also led a $180 million NT$ linked convertible for the group, plus a $650 million GDR, the country’s largest equity deal of the year and largest GDR from Taiwan since 2013.
Citi had an interesting 12 months when it came to ECM. In March this year, it completed a $326 million pre-IPO placement of TSMC’s 13% stake in VisEra Technologies, a colour filter and micro-lens provider.
It also underlined the enduring strength of its client relationships when it executed a $400 million zero coupon convertible for Zhen Ding. The bank has led each of its three-equity linked deals since it listed in 2011.
DCM was also a lot more active than in recent years with jumbo dollar deals for TSMC and Hon Hai. The Formosa market was also exceptionally busy and Goldman had a phenomenal year, not least bringing the State of Israel to the market with an inaugural $5 billion 40-year deal.
Citi and Goldman were both bookrunners on TSMC’s $3 billion triple-tranche offering. As clients go, they don’t get much better.
However, FinanceAsia judges awards on the basis that both the issuer and investor is happy. TSMC pushed for exceptionally aggressive pricing and this led to a poor secondary market performance.
By contrast, a $1.4 billion five- and 10-year offering for Hon Hai traded up. Citi was one of the four joint global co-ordinators.
Citi also wins Best Bank in Taiwan as it has done for many years. It is the most profitable foreign bank in the country, reporting Ebit of $338 million for 2020.
Earlier this year, it announced a major strategic shift that will see it exit retail banking. But it will retain its strong focus on institutional and corporate banking.
Citi is the largest custodian in the country with assets of $535 billion. It also processes 15% of dollar flows, making it the largest transaction bank.
When Covid-19 struck the bank was well placed because of its global digital platforms and products that enabled clients to continue operating. It shortened the credit application time to just nine days for urgent cases.
It also helped clients to keep their fund collection and payment processes up-to-date because it had begun transitioning many to its CitiDirect BE (treasury and trade solutions) and Citi e-banking platform back in 2019. By utilising the former, Citi clients have been able to conduct transactions remotely and centrally monitor fund movements in their overseas accounts.
THAILAND
DOMESTIC
BEST BANK, BEST SUSTAINABLE BANK: KBank
The whole Thai banking sector experienced a difficult 2020 with reductions in profitability across the board. However, Covid-19’s impact was well managed thanks to a government relief programme, plus banks’ conservative provisioning and strong balance sheets.
KASIKORNBANK (KBank) was the stand out against this difficult macro-economic backdrop. It remains the country’s largest bank by assets and profitability.
Indeed, it widened the profitability gap with its nearest rivals, Bangkok Bank and Siam Commercial Bank (SCB), both of which suffered much higher net income falls. KBank also has industry leading efficiency metrics and it was the clear and unanimous choice to win the award for Best Bank.
The bank’s own data shows that it ended FY20 with an ROAE of 7.1%, ROAA of 0.85%, NIM of 3.27% and cost-to-income ratio of 45.19%.
The bank took an early stance regarding provisions during the first half of 2020 and went on to set aside Bt43.6 billion ($1.4 billion) to cover expected credit losses over the course of the financial year. This was up 28% on 2019.
It also moved to strengthen its balance sheet by issuing a $500 million additional tier-1 (AT1) deal in October. As a result, its CAR ended the year at 18.8% compared to 19.62% in 2019.
In 2021, KBank has come roaring back, outperforming even the most bullish analysts’ expectations. First quarter net profits rose 44% to Bt10.6 billion year-on-year.
It is currently the country’s largest corporate lender and is moving into retail loans using data analytics to enhance a well-balanced loan portfolio and bolstering its capital to mitigate future uncertainties. One big focus is digital lending to help keep its NIM within a 3.1% to 3.3% target range in 2021.
It wants to increase lending this year through KASIKORN LINE, a joint venture between KBank and fintech LINE Financial Asia.
In October, KASIKORN LINE launched a social banking service on LINE’s app to capture the 60% of the Thai population that is either underbanked or unbanked. Within four months of operation, it has signed up two million users.
Another strategic pillar is regional expansion. Many of KBank’s clients have expanded into Vietnam and it hopes to follow them with its first branch in the third quarter and a Bt10 billion lending target during the first year of operation.
Last year, it also increased its stake in Indonesia’s PT Maspion from 10% to 40%.
For the first year, KBank also wins our award for Best Sustainable Bank. Its sustainability efforts really came of age in 2020 when it became the first and only Thai commercial bank to sign up as a signatory to the UN Principles for Responsible Banking (PRB) and became a supporter of the Taskforce on Climate-financed Financial Disclosure (TCFD).
It has had a sustainable development policy since 2014. Some of its 2025 goals have already been achieved. For example, it wants to have women in at least 45% of leadership roles.
It has set up an exclusion list and sector-specific lending guidelines. It targets 10% loan growth per year in energy and environmental project funding through to 2025.
The ESG ethos now penetrates all arms of the bank. On the DCM side, its landmark deal of the year was PTT’s Bt35 billion jumbo offering last July, which incorporated a Bt2 billion green tranche: a first from an oil and gas company in the country.
The focus also helped KBank to win the award for Best Private Bank as well. It has continually introduced sustainability-focused funds. So far in 2021, this has included K-SUSTAIN-UI, which uses a long-short strategy to generate profits from shares that either benefit from companies transitioning along sustainable guidelines.
BEST INVESTMENT BANK: Siam Commercial Bank
One of Siam Commercial Bank’s (SCB’s) main calling cards is the fact it is a universal bank. Unlike some of its competitors, which divide their investment banking franchise between different business entities, SCB operates as one.
That kind of platform comes into its own when you are hoping to execute the largest M&A transaction in Thai history and you need a bridging loan to accompany it. This was what CP Group needed to see through its winning Bt338 billion ($10.6 billion) bid to acquire Tesco’s Malaysian and Thai businesses.
It was a highly competitive process, but one during which SCB helped its client to understand the underlying value of the UK retailer’s South-east Asian property portfolio. It also helped it to navigate the complexities of getting domestic regulatory approval given the large market share CP Group now occupies in Thailand.
This was not its only large M&A deal of the year, but it was the one, which decisively swung the award in its favour. Other advisory mandates included Thai Oil Power’s Bt43.65 billion restructuring.
SCB also shone in ECM thanks to its starring role in the Bt45.38 billion IPO for SCG Packaging, the second largest of the year. It was the only domestic bank that was on the deal from one end to the other and it did a good job helping the packaging company to execute it at the top of its price range a time when the Thai stock market was still in a Covid-19 downturn.
The bank was a lead on the third largest IPO of the year, a Bt8.4 billion deal for Kerry Express. The company lived up to its name through the speed of the deal execution – just under one month separated the initial investor outreach and the closure of the cornerstone process in December 2020.
BEST ECM HOUSE: Bualuang Securities
What a year for Bualuang Securities. It is always good to the top the ECM league tables as it did in 2020. But even better to do so as a result of being the only Thai house on two of the country’s largest-ever IPOs.
Bualuang was the lead manager for both PTT Oil and Retail’s (PTTOR) BT54 billion ($1.74 billion) IPO in February 2021 and SCG Packaging’s Bt45.38 billion IPO in October 2020.
Thai IPOs are generally a strong draw because they’re priced to please issuers and investors. Secondary market performance normally heads up rather than down.
As a consumer focused packaging company, SCG was always likely to be well received. However, the offering came at a tricky time when the market was still in the throes of its Covid-19 related downturn.
Nevertheless, it attracted a strong order book and has traded well in the secondary market, rising to the Bt63.75 level by mid-July compared to a Bt35 issue price.
SCG opened the door for PTTOR’s whose transaction was a landmark for the Thai equity markets on a number of levels. There was a cornerstone tranche, but for the first time ever, no institutional bookbuild.
The Thai government and company wanted to prioritise retail investors and not just existing retail investors but the kind of Thai citizens who don’t own shares. That would have been a pretty tall order at the best of times, but doubly difficult to execute during a global pandemic when bank branches were shut.
So it was an incredible feat to pull in 480,000 retail investors, a record number for a Thai IPO. Thailand has always been an active retail market and PTTOR’s achievement heralds a new chapter for jumbo IPOs.
Bualuang demonstrated the breath of its expertise and client loyalty by executing a further three benchmark secondary deals over the course of FinanceAsia’s awards period.
These comprised: a Bt31.99 billion rights offering for GULF Energy, which wanted to raise money for business expansion, a Bt9.85 billion rights offering for Minor International, which needed to bolster liquidity after Covid-19 sank the tourist industry and a Bt12.68 billion private placement by two shareholders in Osotspa who didn’t want to alert the market via a public deal.
BEST DCM HOUSE: Bangkok Bank
This is always one of the most difficult awards that FinanceAsia has to judge because there’s often no more than a hair’s breadth between Bangkok Bank and KASIKORNBANK. They are on many of the same deals together.
But this year there was a very clear winner and that was Bangkok Bank. It was a standout in a year when many Asian banks made strides in ESG financing.
Bangkok Bank’s ESG deal roster was extremely impressive and led by the Kingdom of Thailand, which established a sustainable financing framework via the Ministry of Finance. This led to the launch of two bonds: a Bt30 billion ($970 million) deal in August 2020; and a Bt20 billion re-opening in November.
The bank advised on the framework and was a lead manager for both of the sovereign’s deals. These were also upsized to include funds for the government’s Covid-19 rehabilitation package as well as for the Mass Rail Transit, the original intention.
The government set an important benchmark for the corporate sector and in doing so also underlined how green bonds can now achieve better pricing than conventional ones because they draw in a wider investor base. For example, the government’s 15.34 year August 2020 bond carried a 1.585% coupon at a time when the equivalent 15-year Treasury was trading at 1.588% (14.86 years to maturity).
Bangkok Bank helped another debut green issuer to achieve the same feat. The same month, Global Power Synergy Company (GPSC) issued a Bt5 billion tranche deal that carried a AA- rating from TRIS but priced in line with AAA rated comparables like PTT. Proceeds are being used to re-finance solar and waste-to-energy projects.
A third debut led by Bangkok Bank came from RATCH Group, which raised Bt8 billion to finance its Australian wind business and Thailand’s Mass Rail Transit. Then there was BTS, which issued its green debut in 2019 and returned to the market in 2020 with a Bt8.6 billion follow-up in November.
BEST BROKER: Kiatnakin Phatra Securities
This is the sixth year running in winning the award, although this year the name is not Phatra Securities but Kiatnakin Phatra Securities (KKPS). This follows the completion of the merger between Kiatnakin Bank and Phatra Securities to form the Kiatnakin Phatra Financial Group.
Re-branding aside, little has changed in terms of the group’s domestic dominance and growing offshore ambitions. One of the key trends across FinanceAsia’s broking awards, this year, has been accelerating online trading, thanks to Covid-19.
Stock Exchange of Thailand (SET) data shows that KKPS ended the year in the top spot with a 10.6% market share of online account trading almost double Maybank Kim Eng in second place on 6.34%. The exchange reported a doubling in volumes during 2020.
KKPS also increased its market share among both domestic and foreign institutions. During our 2020 Country Awards, it reported respective market shares of 17.42% and 7.6%. This year, they had climbed to 23.7% and 8%.
At the end of the awards period, its Private Wealth Management Group had AUM of Bt610 billion ($19.7 billion). Many are using KKPS Edge, its financial planning and investment advisory service for mass affluent clients with a Bt2 million to Bt30 million.
User numbers climbed from 8,854 during last year’s awards to 9,398 during this year’s, while AUM rose to Bt49.83 billion.
In 2019, the group launched direct offshore investment for wealth management clients and this has been going from strength, underpinning the overall franchise. In March this year, KKPS chose funds supermarket, Allfunds, as the investment fund platform partner for its wealth business to expand the product range that it could offer its clients.
KKPS is always a frontrunner for the accompanying ECM award and this year its distribution capabilities were on display again thanks to its bookrunning role on the market’s second largest ever corporate IPO for PTT O&R, which raised Bt54 billion and a Bt5.02 billion overnight placement in TMB Bank.
BEST PRIVATE BANK: KBank
KBank wins the award for another year thanks to a succession of innovative product launches.
Last year, we wrote about how the private bank was starting to make a name for itself in ESG investing after 2019’s launch of: a K Global High Impact Thematic Equity Fund (K-HIT); and K Positive Change Equity Fund (K-Change). The strong performance (K-Change rose more than 50% during 2020) provided firm foundations for the funds that have followed.
In August 2020, KBank invited former US vice president and environmentalist, Al Gore, to share his inspiration on who to drive the sustainability revolution in Thailand. KBank then launched a K-Climate Transition Fund with the support of its strategic partner Lombard Odier.
This year it has launched a K-SUSTAIN-UI Fund targeting companies that have a clear ESG transition strategy.
KBank is also breaking new ground in private equity investment. In 2019, it teamed up with Baillie Gifford to give Thai investors access to global private equity investments.
This summer, it will give them access to domestic ones for the first time through a fund it is launching with Singapore’s Fullerton Fund Management.
The bank’s reputation for originality is unsurprisingly paying dividends in terms of client growth. During 2020, it recorded 3% growth in client numbers to 12,000.
Its AUM was also up 3% to Bt810 billion ($26.07 billion). This had a 70/30 investment to deposit ratio.
One very big focus for Thai domestic private banks is wresting away the very largest clients from the international private banks that have been in Asia for a long time.
KBank is rapidly building up the expertise of its Family Wealth Planning division, which was servicing 300 families at the end of 2020. It launched escrow advisory services at the end of the year.
Later this year, or at the beginning of 2022, it hopes to have a family office in situ after working with the Bank of Thailand to establish regulations for domestic banks to operate in the sector.
BEST LAW FIRM: Weerawong, Chinnavat & Partners
When it comes to domestic law firms, Weerawong remains in a league of its own. The firm continues to go from strength to strength and has been growing fast in tandem with increasing deal flow in the country.
The government’s ambitious infrastructure projects, Thai corporates international expansion plans the relocation of global supply chains from China into countries like Thailand makes for a heady mix.
Weerawong has responded in kind by establishing new practise areas and beefing up existing ones such as its project teams, which now numbers five partners. New additions include: an international trade team that encompasses eight new legal professionals; a competition law team; a personal data protection team; and an ESG team.
The list of landmark infrastructure projects that Weerawong is advising on is too numerous to relate in full. But key projects include advising the government on a joint investment agreement for the U-Tapao Airport and Eastern Aviation Development Project (signed in June 2020) and advising the Bangkok Mass Transit Public System on the implementation of a public private partnership (PPP) mechanism for the Green Line Mass Transit Extension.
Thai capital markets had an active 2020 and Weerawong was right at the heart of the action. It advised PTT on how to carve out its highly lucrative retail businesses and then list them on the stock exchange in the country’s second largest corporate IPO of all time.
The deal was unique in many ways, not least in the way it was structured to target retail investors that don’t normally participate in the stock market. It was a huge success in both the primary and secondary markets.
Weerawong also advised Sri Trang Gloves on its Bt14.9 billion ($482 million) offering and Kerry Express on its Bt8.4 billion IPO.
The law firm was equally active across M&A and DCM. One of the notable trends of 2020 was a growing number of green bonds – Weerawong advised BTS on its offering.
In terms of M&A, its most successful client was Global Power Synergy, which completed two deals.
INTERNATIONAL
BEST BANK: HSBC
It was a year when pretty much every single bank in Thailand reported a steep drop in profits. But not HSBC, which reclaims the award as Best Bank in Thailand.
S&P Global Market Intelligence data reports that net profits inched up from Bt2.51 billion ($81 million) in 2019 to Bt2.56 billion in 2020. It wasn’t much, but it completely bucked the market trend.
HSBC is likely to have a much stronger 2021 particularly after it established a private banking operation in the country this February. The bank’s wealth management business is strengthening right across the region and its new in-country business should aid that further.
It will also complement and balance its corporate business one decade after it sold its domestic retail operations.
HSBC is a global DCM powerhouse and investment banking activity picked up during 2020 in tandem with increased international issuance by Thai corporates. PTT was at the helm of deals for: PTTE&P, Minor International and Krung Thai Bank.
Perhaps more notably, it also brought its leading edge ESG credentials to bear with the country’s first sustainability-linked loan, a Bt12 billion transaction for seafood producer, Thai Union Group. In the domestic bond market, it was the lead manager for a Bt6 billion green bond by the government-owned Bank of Agriculture and Agricultural Co-operatives (BAAC).
HSBC’s digital expertise was also on display. In its trade finance business, for example, it helped two clients to execute their first blockchain-enabled LC transactions on the Contour platform: Indorama Ventures (a Thai petrochemicals group); and Australia’s Techwool Trading. HSBC acted as the issuing and advising bank for both sides.
The bank also remains a big player in securities services. In 2020, it had a 45% market share of equity and bond assets under custody.
BEST INVESTMENT BANK: UBS
This is always a hotly contested award and this year it was UBSm which took the top spot, a position it has often held over the years.
Thailand is one of the Swiss bank’s strongest franchises in Asia and it has some very deep corporate relationships with a number of the country’s private sector powerhouses.
One group, in particular, helped UBS to clinch the crown this year and that was Charoen Pokphand Group (CP Group). Its Bt338 billion ($10.6 billion) acquisition of Tesco’s Thai and Malaysian businesses was a huge deal by any standards: the largest-ever M&A deal from Thailand and largest-ever in Asia ex Japan’s consumer and retail sector.
It was a bold move and one that underlines a shift in power from West to East and the rise of regional consumer powerhouses. It was also a fairly complex transaction for UBS to act as sell-side advisor on. It was by no means easy to execute given regulatory concerns about the market share the CP Group would hold in its home market post completion.
UBS also carried another large CP deal on its books last year. This involved Chia Tai investment, an indirect subsidiary of CP Food, which is taking over Chia Tai Animal Husbandry in a $6.3 billion re-organisation to bring the group’s feed milling and swine businesses together.
Then completing a hat trick of deals for CP group entities was a $275 million exchangeable bond that UBS executed for CP Foods in June 2020.
Last year was a strong one for Thai ECM as a whole. It’s a sector where UBS always has a strong showing.
Last year was no different and UBS was the sole international advisor and a joint global co-ordinator on the second largest IPO of the year and third largest-ever from the corporate sector: SCG Packaging’s Bt45.38 billion flotation in the autumn of 2020.
One factor that UBS has in its favour is its global wealth management platform. The combined order from its global wealth clients accounted for the single largest ticket in SCG’s Packaging’s order book and could have covered the entire book-built portion of the deal.
Such enthusiasm was not that surprising given how well Thai IPOs tend to trade in the second market. SCG Packaging followed in the same tradition, consistently rising throughout 2021.
All of this made this year’s awards decision a pretty easy one for the judges. UBS is now the bank to beat.
VIETNAM
DOMESTIC
BEST BANK: Techcombank
This is the second year in succession Techcombank has won the award for Best Bank – and in 2020 it put even clearer water between itself and the competition.
Last year, Vietnam was one of the few countries that recorded positive GDP growth, although at 2.9% this was lower than the country’s pre-pandemic level of 7%. The country handled the pandemic remarkably well throughout 2020 and this year, the economy has resumed its upward trajectory.
What stands out is how well Techcombank managed to spectacularly outperform that benign economic backdrop. Its net profits grew 23% and its ratios improved across the board.
S&P Global Market Intelligence data shows that ROAA rose from 2.9% to 3.1% during FY20. Its NIM was up from 4.3% to 5%. Its cost-to-income ratio dropped from 36.5% to 33.3%.
The bank’s success is simple to explain: it attracts clients with a customer-centric strategy and then builds a long-term relationship with them. It knows what it does well and it continually and successfully strives to get better at it.
Techcombank has a strong focus on the affluent and mass affluent segments, riding their growing wealth as Vietnam strives to move from a middle-income to a high-income country. It captured more of this business in 2020.
The bank’s fastest growing business segment was personal financial services. A combination of increasing deposits and lower interest rates helped.
As such, the bank improved its CASA ratio from 34.5% at the end of 2019 to 46.1% by the end of 2020. It has set a 55% ratio as part of its new five-year plan.
Techcombank is also a digital pioneer. Covid-19 not only helped it to sharpen this focus further but also take advantage of investments already made. The bank is investing in cloud infrastructure to improve its performance and stability, plus data lake-based infrastructure to drive granular insights.
Techcombank believes technology is the only way to unlock this opportunity and retain its superior profitability as it scales up.
Digital adoption is rapidly advancing. Online bill payment rose from 19% to 54% during 2020. Likewise retail ebanking rose from an already high 75% ratio at the end of 2020 to 82% by the first quarter of 2021.
Techcombank also improved its own decision-making after launching a Business Credit Decision Engine (BCDE). It has digitalised 5,400 corporate clients, 13,600 financial statements and more than 3,500 ratings after 06 months.
Techcombank also ensured that it has a fortress balance sheet to weather any future Covid storms and fund growth. In May 2020, it raised $500 million in the largest-ever syndicated loan from the Vietnamese banking sector.
BEST INVESTMENT BANK: HSC
This is the first time Ho Chi Minh Securities Corp (HSC) has won one of the categories in our Country Awards. Its achievement is testament to the way that the firm has built up its business and standing over the past few years in tandem with Vietnam’s rapid economic growth.
It won the award after a tight contest with Viet Capital Securities, which has extremely strong relationships with a number of the country’s leading conglomerates, most notably Masan and Vingroup.
However, 2020’s roll call was dominated by deals from the banking sector. This is a sector that HSC has maintained a strong hold over ever since it successfully executed HDBank’s IPO in 2018.
This deal provided HSC with relationships and market insights that it has been able to successfully leverage into other transactions since then. It has now become the go-to advisor for banks and external investors that want to buy or sell equity in the country’s financial sector.
As such in 2020, HSC helped Japan’s Aozora Bank to purchase a 15% stake in OCB Bank for $159 million. The two banks appear to be a good fit given their respective strengths in SME lending.
The stake sale was executed at 1.9 times forward book. This was a fairly punchy valuation given the inherent trading risk of OCB Bank’s mooted move from the OTC to public equity markets, but the Japanese bank felt that it was worth it on the basis of its long-term strategic view.
HSC was also a driving force in aiding the government’s plan to shift roughly a dozen largely family-run Vietnamese banks from the OTC to public equity markets to improve the sector’s corporate governance. HSC helped three banks to list by the central bank’s deadline: Maritime Commercial Bank (MSB); Southeast Asia Commercial Bank (SeABank); and Vietnam International Commercial Bank (VIB Bank).
MSB was the trickiest of the trio from a due diligence perspective as its asset base includes ships it received as a result of the debt restructuring involving state shipbuilder Vinashin a decade ago.
Right at the end of the awards period, HSC also executed the largest secondary markets equity deal of the 12 months under consideration: a VND3 trillion ($132 million) block trade in Asia Commercial Bank (ACB) by Dragon Capital group companies. It has another landmark transaction to add to a growing roster.
BEST ECM HOUSE: Viet Capital Securities
Viet Capital has built up a strong investment banking franchise since it was established in 2007 and regularly tops the league tables across equities and M&A. This means that it has built up an enviable track record, making it a safe and easy choice for companies looking to list or raise new equity. When it comes to winning ECM mandates, it’s always the domestic house to beat.
Its broking arm also helps to underpin its investment banking franchise because of its sight across foreign flows into the domestic stock market. In 2020, Viet Capital ranked number one in this segment with a 28.5% market share.
Its other big calling card is the strong relationships it has forged with the private sector business groups, which increasingly dominate economic activity in the country. It has been an advisor to Masan Group for over a decade, for example.
In 2020, this led to its role as sell-side advisor on the transfer of 38.9 million shares in Masan to Singapore’s sovereign wealth fund, GIC. The transaction helped GIC to lift its stake towards the 9% mark.
Its other major equity deal, in a year of slim pickings across the whole market, was for Bien Hoa Packing. It acted as the sell-side advisor in the divestment of a 94% stake to Thailand’s Siam Cement Group for $89 million equivalent.
SVI is the leading packaging player in Vietnam and represented an attractive asset for Thai companies, which are always keen to expand into the country. In this particular case, the main challenge was Covid-19 travel restrictions, which made it hard for prospective buyers to conclude in-country due diligence and bidding.
Viet Capital, nevertheless, managed to achieve a premium valuation of double-digit EV/EBITDA compared to an industry average around the eight times level.
BEST DCM HOUSE: Techcom Securities
Techcom Securities has now won this award for four years running. It has done so in the face of increasing competition from all sides at a time when the Vietnamese bond market is going from strength to strength.
Its winning streak is down to the fact that it remains a pioneer and leads from the front. In 2020, for example, this resulted in a 68% brokerage market share for exchange-listed bonds.
Techcom securities also executed more deals than the year before, with corporate and bank bond volumes rising to VND77 trillion ($3.34 billion) from VND61 trillion. This gave the securities house an overall 20% market share.
The Vietnamese bond market is currently characterised by a sharp divide between public and private bonds. The Vietnamese government is keen to persuade issuers to use a public bond format, but very few do so because of the lengthy and onerous due diligence involved.
As a result, only some of the largest private sector conglomerates like Masan and Vingroup have bothered to go through the process. In 2020, Techcom Securities led about VND22 trillion in public bonds.
Most issuers continued proceeding down the route of using a private placement format, then getting the bonds listed on the exchange. The government clamped down on the practise at the end of the year in a renewed bid to encourage more public issuance, which should put Techcom in a strong position over the coming year’s awards.
Another first for Techcom Securities in 2020 was a VND600 billion deal it led for HSBC. This represented the first time a foreign bank had raised funds in the domestic bond market.
It was an important benchmark and it went well. The three-year deal carried a 5.8% coupon below the prevailing 6% time one-year deposit rate, but nevertheless still closed 2.5 times oversubscribed.
BEST BROKER: SSI Securities Corp
One of the biggest themes of this year’s Country Awards has been a rush of retail investors into the region’s equity markets. Every single broker that FinanceAsia spoke to during the process reported consistently large numbers of retail investors signing up for new accounts.
So this was never going to be the year that SSI lost this award. It is Vietnam’s largest retail broker and over the past year has consolidated that position even further.
It ranked number one on the Ho Chi Minh Stock Exchange (HOSE) throughout the period with an overall 12.48% average market share. It had a 7.67% share on the Hanoi Stock Exchange (HNX) and an 11.2% aggregated share across all three equity exchanges when UPCoM is taken into account as well.
SSI reported the same 90/10 split between retail and institutional investors that it did in 2019. However, its revenues also showed how more active those retail investors have become since it derived $57.8 million from them in 2020 compared to $49 million in 2019.
Institutional revenues also rose from a lower base from $5 million to $5.4 million.
SSI recorded 28,000 new investors open accounts in 2020 and a further 21,000 in the first quarter of 2021 after Vietnamese equity markets started to perform more strongly. This brought total account numbers up to 235,000 as of May 2021.
Vietnam as a whole now has 3.25 million retail investors from 2.3 million the year before. This now equates to 3% of the population. Retail accounts for about 90% of average daily trading.
The government has an ambitious target of getting 10% of the population to open broking accounts and SSI is in pole position to capture them. It made strides to make account opening easier: it is now completely paperless.
It also increased training throughout its broker network and introduced a number of new research products including a weekly newsletter.
INTERNATIONAL
BEST BANK: HSBC
HSBC remains in a league of its own in Vietnam. Japanese and South Korean banks have been actively targeting the country over the past few years, but they have been doing so by acquiring strategic stakes in local banks.
HSBC, by contrast, has been in Vietnam in its own right since 1870. It has an incredibly strong brand in the country and it underlined this further in 2020 when it became the first foreign bank to issue in the domestic bond market.
Its VND600 billion ($26 million) offering created a whole new segment for foreign issuers, which has been dubbed the Lotus bond market after Vietnam’s national flower. The bank’s three-year deal was also incredibly well received, closing two-and-a-half times oversubscribed despite pricing through one-year time deposit rates.
Proceeds are being used to finance its expansion in the country. During 2020, asset growth moderated but still moved in a positive direction, up 3% year-on-year to VND129.04 trillion.
This was led by a 3% growth in deposits. This was helped by a market-first; in December, it launched the country’s first step-up time deposit, which gives retail customers the flexibility to withdraw funds without being penalised.
One recurring trend in every single country that HSBC has won Best Bank in this year is how it has advanced ESG financing.
In July 2020, the bank provided its first sustainable loan for a local Vietnamese corporate, Duy Tan. This financed the first phase of a $60 million plastic recycling plant.
Then, in November, it provided its first green loan in the country for REE Corp. The engineering group is utilising the proceeds for a rooftop solar energy project.
Throughout 2020, Vietnam stood out as one of the few countries that managed to get off lightly where Covid-19 case rates were concerned. However, while businesses remained open, the digital revolution continued at pretty much the same speed as the rest of the region.
HSBC launched a whole host of new digital initiatives to serve its customers better. One example is real-time payments; it went live with inward payments in September 2020 and is expected to go live with outward in the fourth quarter of this year.
BEST INVESTMENT BANK: Credit Suisse
The Swiss bank’s hold over this award gets ever stronger by the year. And while 2020 was not a banner one for Vietnam from a transactions point of view, it is nevertheless surprising that Credit Suisse has still not faced more international competition in a country with so much potential.
The bank’s stickiness at the top of the league tables stems from the long-standing relationships it has now forged with the country’s leading business groups, underpinned by local rainmaker Le Hoai Nam. This makes it extremely hard to dislodge.
In 2020, it was once more involved in the vast majority of cross-border deals across the M&A and equity markets. It completed a total of 12 transactions with a combined deal size of about $2.7 billion.
The largest transaction was the VND15.1 trillion ($650 million) investment by a KKR-led consortium into Vinhomes, the property development arm of Vingroup, which Credit Suisse had previously helped to float in 2018. During FinanceAsia’s awards period, it did two further Vinhomes-linked equity deals: a $70 million equivalent placement in August 2020; and a $234 million one the following month in September.
Asia Commercial Bank (ACB) was probably Credit Suisse’s second most active client during 2020. The former transferred its stock from the Hanoi to the Ho Chi Minh Stock Exchange at the end of the year.
Credit Suisse was then the bookrunner for a VND3.1 trillion divestment in the bank by Dragon Capital funds in March 2021. The bank also advised ACB on the establishment of a long-term life insurance distribution partnership with Sun Life.
In the loan markets, Credit Suisse put its balance sheet to work for four major clients acting as a mandated lead arranger and bookrunner for: Masan Group ($350 million); Vingroup ($365 million); Vinpearl ($300 million); and FE Credit ($126 million).
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